CFTC Issues No-Action Relief from Audit Trail Data Requirements in Post-Trade Allocation (CFTC Letter 15-68)
Commentary by Steven Lofchie
The CFTC provided time-limited no-action relief to swap execution facilities ("SEF") from the requirement to capture post-trade information in their data on audit trails.
The relief is subject to the condition that an SEF must require the relevant market participants to provide trade data to either the SEF or the CFTC. Further, in the event of either a market or trade practice surveillance investigation, "the SEF must ascertain whether a post-trade allocation was made, and if so, the SEF must request, obtain, and review the post-trade allocation information as part of its investigation."
The no-action relief will expire on November 15, 2017.
Commentary
Given the resource limitations under the 2016 budget (see CFTC Chair Massad Criticizes Budget Deal (with Lofchie Comment)), the CFTC should conserve regulatory resources by ceasing to grant time-limited no-action relief from unnecessary rule requirements. It would be simpler to grant indefinite relief under the conditions specified in the letter, which seem sufficient to permit the CFTC to achieve its regulatory goals. By providing two years of relief to SEFs (which indicates the requirement's lack of urgency), the CFTC has obligated itself to expend future resources by revisiting the question in 2017.